Kisan Credit Card

The Kisan Credit Card (KCC) scheme introduced in August 1998 has emerged as an innovative credit delivery
mechanism to meet the production credit requirements of the farmers in a timely and hassle-free manner. The
scheme is under implementation in the entire country by the vast institutional credit framework involving
Commercial Banks, RRBs and Cooperatives and has received wide acceptability amongst bankers and farmers.
However, during the last 15 years of implementation, many impediments were encountered by policy makers,
implementing banks and the farmers in the implementation of the scheme. Recommendations of various
Committees appointed by GoI and studies conducted by NABARD also corroborate this fact. It was, therefore,
felt necessary to revisit the existing KCC Scheme to make it truly simple and hassle free for both the farmers and
bankers. Accordingly, Ministry of Finance, Dept of Financial services, Govt of India had constituted a Working
Group under the Chairmanship of Shri T. M. Bhasin, CMD of Indian Bank to review the Kisan Credit Card to
suggest changes to be made in the KCC scheme to make it a Smart Card cum Debit Card.
On acceptance of the recommendations of the Working Group by Govt. of India, revised operational guidelines
on KCC were issued by NABARD to Cooperative Banks, RRBs and by RBI to Commercial Banks in the year
2012. Banks were advised to devise suitable strategies to implement the scheme in a time bound manner.
Improvements in the guidelines over the earlier KCC scheme are as under:
1.

Paper card (pass book) to Plastic card - KCC in the form of ATM enabled Debit card

2.

Wider delivery channels : Operations through Branch/Cheque facility/BCs/ATM (debit card)/POS/Mobile

handsets

3.

More clarity in assessing credit needs (inclusion of post harvest / household/consumption needs up to
10% + maintenance expenses up to 20%)

4.

Cost escalation built in for assessing the limit Notional hike of 10% for fixing credit limit from second
year onwards

5.

More activities covered under Term Loan

6.

Emphasis on financing Joint Liability Groups

7.

One time documentation at first availment and thereafter simple declaration from second year

8.

Moving towards accessing online land record and Creation of charge.

Objective

a) Kisan Credit Card Scheme aims at providing need

based and timely credit support to the farmers for their
cultivation needs as well as non-farm activities and cost
effective manner.
b) To bring about flexibility and operational freedom in
credit utilisation.

Eligibility

a) Under the scheme, Branches may issue Kisan Credit

Cards to the farmers who are otherwise eligible for
sanction of short term credit for crop production, allied
activities and other non-farm activities.
b) The farmers should come from the operational area of
the Branch.

Issue of cards

a) The farmers under the scheme will be issued a credit

card-cum-passbook incorporating the name, address,
particulars of land holding, borrowing limit / sub-limits,
validity period, etc. to facilitate recording of the
transactions on an on-going basis. The passbook, among
others, would provide for a passport size photograph of
the beneficiary.
b) The beneficiary farmer should produce the passbook
while operating the account.

Technical Feasibility

a) Suitability of soil, climate and availability of adequate

irrigation facilities.
b) Suitability of the produce for storage.
c) Suitability of the storage unit

Financial Viability

The expected incremental income should be adequate to

repay the advance leaving sufficient balance for farmers
domestic needs.

Quantum of Finance
and margin

For production / short term purposes - Loan

amount will depend upon the type of crop, area
under cultivation and scale of finance.

Short term working capital - For ancillary

activities and minor investment of medium term

nature.

Short term credit for consumption / domestic

needs to the extent of upto 25 percent of gross
estimated income of the farmer and maximum
Rs.50,000/=.

Finance against storage receipts / produce

marketing may be considered maximum upto 50
percent of the price of the produce prevailing at
the time of storage / sanction of loan. Limits /
advances upto Rs.10 lakhs per farmer can be
extended for a maximum period of 12 months.
However, the amount of finance to the extent of
net of loan may be made available to the farmer.

Note:
i) While fixing the limit, the Branch may take into account
the entire production credit requirements of the farmer for
the full year, including the credit requirements of the
farmer for the ancillary activities related to crop
production such as maintenance of agricultural
machinery / implements, electricity charges, etc.
ii) The credit limit could also provide for allied activities
and non-farm credit needs of the borrowers.
iii) The credit limit under the card may be fixed on the
basis of the operational land holding, cropping pattern and
scale of finance as recommended by the District Level
Technical Committee (DLTC) / State Level Technical
Committee (SLTC). Wherever the DLTC / SLTC have not
recommended scale of finance for any crop or in the
opinion of the Branches, has recommended lower than the
required amount, the Branches may fix appropriate scale
of finance for the crop after due approval by the Zonal
Office.
iv) For fixation of credit card limit, operational land
holdings will include the leased-in land and exclude leased
out land.
v) Branches may at their discretion fix appropriate sublimits within the overall credit limit sanctioned, taking into

account the seasonality in credit requirements.

Type of Facilities

(a) Revolving Cash Credit Annual Review. The farmer

should be allowed for any number of drawals and
repayment within the limit.
(b) The review may result in continuation of the facility,
enhancement of the limit or cancellation of the limit /
withdrawal of the facility, depending upon the
performance of the borrower.
(c) The aggregate of credits into the account during the 12
months period should atleast be equal to the maximum
outstanding in the account.
(d) No drawal in the account should remain outstanding
for more than 12 months in case of normal crops and 18
months in case of sugarcane and banana crops.
(e) In case of reschedulement of the period of repayment
on account of natural calamities affecting the farmer, the
period for reckoning the status of operations as
satisfactory or otherwise would get extended together with
the extended amount of limit. When the proposed
extension is beyond one crop season, the aggregate of
debits for which extension is granted should be transferred
to a separate term loan account with stipulation for
repayment in instalments as per existing guidelines.
(f) As a measure of incentive for card holders with good
performance, the Branches may at the time of review,
enhance the credit limit suitably to take care of increase in
cost of inputs / labour, change in cropping pattern, etc.

Security

(a) Upto Rs.50,000/= : D. P. Note Hypothecation of

standing crops
(b) Above Rs.50,000/= : D. P. Note Hypothecation of
standing crops Mortgage of land / Collateral security

Note:
(i) In case the value of land mortgaged is adequate, no
other security should be obtained.
(ii) For finance against Government warehouse receipts,
mortgage may be waived.
(iii) Waiver of mortgage of land in deserving cases may be
considered as per security norms.
(iv) The RBI norms on security should be strictly adhered
to.
Common Documents:
(a) Demand Promissory Note.
(b) Deed of Composite Hypothecation Agreement (CHA1).
(c) Letter of Authority (AG-15).
(d) Charge on land as per Agricultural Credit Act or
Equitable mortgage or Legal Mortgage of land (CHA-4).
(e) Letter of Pledge (OD-159).
(f) Pledge of Storage Receipt duly discharged.
(g) Undertaking to repay the advance within 12 months or
on sale of produce.
(h) Banks lien to be notified to the storage unit.
(i) Undertaking from the godown / cold storage owners
not to deliver the goods without production of the pledged
storage receipt.
(j) L-515.
(k) L-516 (if required).
Note:
(i) Documents mentioned under (e) to (i) above are
applicable only if sub-limit against storage receipt is
sanctioned.
(ii) In case produce marketing limit is extended against the
produce stored in the premises of the farmer, then
hypothecation deed (CHA-1) should suffice to cover
hypothecation charge on the produce stored.

Rate of Interest

(a) On Debit Balance : As advised by Head Office from time to time

(b) On Credit Balance : Rate of interest payable will be as per Savings Bank
interest rate and follow the Savings Bank Rules except opening a separate
account.

Other Operational Guidelines

(a) Where finance is considered only for a specific crop, say sugarcane through

tie-up with a sugar factory and farmer has obtained finance for other crops from
other Bank / Co-operative society, such farmer can be financed for sugarcane
crop provided dues certificate is submitted and there are no overdues. In such
cases, other financing Bank / Co-operative society should be advised of the
liabilities with us.
(b) Wherever crop insurance is available, coverage needs to be obtained.
(c) In case of default, the special facilities under the scheme should be
immediately withdrawn and the limit should be treated as normal crop finance
which would broadly mean

Application Of Prudential
Norms

Withdrawal of cheque book facility (if issued).

Future disbursement on regularisation of account against bills /

receipts.

Cash disbursement only to the extent of cash component.

Withdrawal of card.

(a) Kisan Credit Card facility being in the nature of cash credit accommodation
for agricultural purposes, the prudential norms as applicable to such facilities
would apply to the KCC accounts.
(b) In other words, the credit card account would be deemed to be a NonPerforming Asset (NPA) if it remains out of order for a period of two crop
seasons / one crop season (as the case may be, depending on the duration of
the crops) after the repayment due date.
(c) The crop seasons after the due date should refer to only those two
consecutive crop seasons in which the farmer usually undertakes crop
production.
(d) An account will be treated as out of order in the following circumstances:

There are no credits in the account continuously for two crop

seasons as on the date of balance sheet, or

The credits in the account are not sufficient even to cover the
interest debited in respect of the account for two crop seasons, or

The outstanding remains continuously in excess of the limit for two

crop seasons as on the date of balance sheet.